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Collins Systems, Inc., is trying to develop an asset-financing plan. The firm has $400,000 in temporary current assets and $300,000 in permanent current assets. Collins
Collins Systems, Inc., is trying to develop an asset-financing plan. The firm has $400,000 in temporary current assets and $300,000 in permanent current assets. Collins also has $500,000 in fixed assets. (a) Construct two alternative financing plans for the firm. One of the plans should be conservative, with 60 percent of assets financed by long-term sources and the rest financed by short-term sources. The other plan should be aggressive, with only 20 percent of assets financed by long-term sources and the remaining assets financed by short-term sources. The current interest rate is 13 percent on long-term funds and 8 percent on short-term financing. Compute the annual interest payments under each plan. Total interest: Conservative- Aggressive- (b) Given that Collins
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